A dose of price transparency

Thursday

Jul 3, 2014 at 6:00 AM

By Martha Temple

Most consumers expect to know at least the price of a product or service before buying it. Usually, they know far more information about what they are buying — except when it comes to health care. Most patients don't know the cost of their health care until after it is delivered and the bill arrives.

The veil over pricing is woven from a variety of threads, but it is time to unravel them. The government projects that national health care spending will reach nearly $10,000 per person this year, making Americans the world's biggest health care spenders, yet in certain rankings of the world's healthiest nations, the United States isn't even in the top 30.

Per capita, the U.S. spends nearly twice as much on health care as any other developed nation. And in Massachusetts, patients spend more than residents of any other state. Per capita costs in the commonwealth will well exceed $10,000 this year.

Massachusetts consumers can help lower their health care costs by exercising their power to know exactly what elective health services will cost — before they have them.

Under a Massachusetts "price transparency" law passed in 2012, health plans are required to provide this information if members ask for it. It also requires carriers to tailor the information to the member's specific plan, taking into account information such as co-pays, deductibles, and co-insurance, as Aetna already does.

The law gives consumers the ability to compare, to shop, to ask questions, and to understand that they have choices. This transparency is critical to improving the health care marketplace and placing consumers at its center.

Aetna wants our members to know their choices before they go to a doctor. For 10 years, we have voluntarily posted price and quality information for health care services on-line. As a result, our members save money — an average of $170 every time they receive a health care service after using the tool. And now we are working with other insurance companies and the Health Care Cost Institute to provide this information about the price and quality of health care services to all consumers — not just Aetna members.

We agree with Massachusetts Office of Consumer Affairs Undersecretary Barbara Anthony's recent comment on NPR. A champion for price transparency, she noted: "It's kind of ridiculous…..that we're actually talking about the pros and cons of whether consumers should know how much their health care costs. [W]hat other commodity or service do we ever debate whether or not a consumer should know the price of a service before purchasing? You can't even name one."

The information is easy to find. A member simply enters the price transparency tool on-line, selects the name of the procedure from over 650 options, and a town or zip code. The secure on-line tool will immediately provide an initial list of up to 10 nearby in-network locations and their pricing. The listed price includes all the services usually associated with that procedure or service "bundle."

Consumers usually are surprised by the wide variation in pricing.

For example, in Worcester Aetna's negotiated rates for an MRI of the knee can range from $425 at one location to nearly $2,304 at another. Assuming that the annual deductible has been met, a member in a plan with a 20 percent coinsurance would see his or her expected out-of-pocket cost range from $85 up to nearly $461. Since an MRI is a common service with little or no measurable quality variations by facility, the member can choose to save nearly $376.

Physicians who have earned our care quality distinction are noted in the listing so members can factor this information into their decision, too. The tool receives well over one million hits a year, and every year the numbers grow, showing that easily accessible price and quality information is valuable to consumers.

All Massachusetts carriers soon will be required to have their own real-time websites providing cost information to consumers. We hope this information boosts the consumer mindset in health care, and spurs innovation, competition, and a stronger and more affordable health care system.